What Is Data Compromise Coverage?

Updated: July 2018

Data compromise coverage is an optional coverage that may be added to a business insurance policy. This coverage helps reimburse your small business for certain expenses after a data breach. Covered expenses may include:

Informational materials for affected customers or employees

Credit monitoring services for affected customers or employees

Access to an identity theft help line if customer or employee information is stolen

Legal fees after a data breach

Data compromise coverage does not pay to restore your company's computers or systems affected by a data breach.

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Do I Need Data Compromise Coverage For My Business?

Most states now require companies to notify individuals if a data breach may have compromised their personal information, according to the Federal Trade Commission (FTC). Compromised information could include Social Security, driver's license or passport numbers; financial information; or digital signatures or passwords, according to the nonprofit Privacy Rights Clearinghouse. Federal laws also require institutions to notify individuals if personal health information has been compromised, says the FTC.

Having data compromise coverage may help your small business with the expenses related to notifying affected individuals after a data breach.

One way to help prevent a data breach is to create a company policy for handling sensitive, personal information, according to the FTC. If a data breach occurs despite your best efforts, data compromise coverage can help you respond to the crisis.